By Peggy Bekavac Olson
When a crisis occurs, companies can be transformed from being flagship brands to fighting for survival almost overnight. Just think about how recent events involving Toyota, Goldman Sachs and BP have sullied their sterling reputations. These companies have lost sales and significant shareholder value, had their credit ratings downgraded, been subject to government investigation, fined, named in multiple lawsuits, suffered public ridicule - and they continue to pay the price.
A crisis is any situation that threatens or could threaten to harm people or property, seriously interrupt business, damage a company's reputation or negatively impact shareholder value. While you may not be Toyota, Goldman Sachs or BP, your payment business faces unprecedented threats and reputational risks, including interruptions in transaction processing services, processing errors, cyber attacks, loss of clients, bankruptcy, being sued by competitors, natural disasters and so on.
While many companies now have plans for dealing with pandemics and natural disasters, fewer are prepared to combat cyber attacks, data breaches and data center disruptions. Varolii Corp.'s 2009-2010 Preparedness, Security and Crisis Communications Study notes that only 60 percent of companies have a plan for dealing with data center disruptions; 53 percent say they are prepared for data breaches; just 46 percent report being prepared for cyber attacks.
Every business is vulnerable to crises. The days of sticking your head in the sand and believing it can't possibly happen to you are long gone. Not only do you need to deal with a crisis operationally, it's imperative during a crisis to effectively communicate what's happening and what you are doing to resolve the situation. To accomplish this, you need to have a business continuity plan in place that includes a strong crisis communication strategy and tactical plan.
If you don't prepare for potential crises in advance, your business can incur significant damage because during a crisis organizational responses created on the spot typically break down. Stakeholders quickly become confused, angry and reactive if they don't know what's going on. You also run the risk of your company being perceived as inept, dishonest and perhaps even negligent.
Effective crisis communication is not difficult, but it requires advance preparation to minimize damage. The slower your business responds during a crisis, the more significant will be the damages incurred.
Following these best practices can put you and your company on the path to effective crisis communications planning, response and management.
Placeholder statements should be regularly reviewed to determine if they require revision and/or whether statements for additional scenarios might be needed as the payments industry continues to evolve.
The goal of crisis communications is to receive fair and accurate media coverage throughout a crisis, while maintaining or restoring confidence in your business and protecting your company's image among all stakeholders. Although advance preparation has increased dramatically in recent years, many payment organizations remain unprepared or underprepared for crises, creating the potential for irreparable damages should such an event strike.
For the sake of your business and its stakeholders, take steps now to protect your company image in the event of a crisis. Remember, the way in which a business responds during a crisis can determine whether the event builds or seriously damages the company. Ultimately, it can mean the difference between staying in business and being forced to declare bankruptcy.
Peggy Bekavac Olson is the founder of Strategic Marketing, a full-service marketing and communications firm specializing in financial services and electronic payments companies, after serving as Vice President of Marketing and Communications for TSYS Acquiring Solutions for more than five years. She can be reached at 480-706-0816 or email@example.com. Information about Strategic Marketing can be found at www.smktg.com.
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